What is fraud?

 

Fraud is a crime in which some kind of deception is used for personal gain. Fraud comes in many forms and anyone can be a target, including charities.

Fraud can be internal, committed by someone within your charity, or external, committed by someone not directly involved in the charity.

If you think your charity has been a victim of fraud you should report it to the Police Scotland by phoning 101 immediately. You also need to tell OSCR by sending us a notifiable event.

 

Internal fraud

The vast majority of people involved in charities are honest; however, like other sectors charities are not immune from internal or insider fraud. Examples of internal fraud can include:

• Setting up payments to a fake supplier
• Making payments to an employee who does not exist
• Making overpayments for services or products 
• Unauthorised access being gained to the charity’s bank account leading to inappropriate payments being made.

Research from a Charity Commission for England and Wales study Focus on insider fraud: research report concludes that much of the insider fraud looked at in the study were made possible by the organisational culture within the charity, that put too much trust and responsibility in one individual, or allowed a lack of challenge and oversight. 



Having an organisational culture which values openness and transparency can help to overcome these vulnerabilities.